What’s Up With Buyer Fees?

No really, what’s up - as in why are they up so much recently in the equipment auction industry? We would like to think that the transition away from the live sale to online auctions would drive down fees. After all, they are much more cost effective for the auctioneer - no more ramping equipment, large auditoriums, massive yards, hotel stays, flying auctioneers around the world, and free food.

Lets dig into some of the history around buyer fees, because they were not always so high. In fact, they weren’t that prominent at all. Looking at the 1999 Annual Report for the largest legacy live auctioneer stated that it can “attract a broad international base of customers to its auctions” because it does not charge a buyer’s premium. At that time, it appears their auction revenue rate or overall commission was between 8 and 8.5% (more on that later). Things changed sometime around 2009 or 2010, and they began to charge buyer fees.

Another interesting fee on the buyer side arose in the early 2000’s, and that was the “Internet Fee”. Yes, the fee you had to pay if you wanted to use the method which actually drove the highest margins for auctioneers. As a native digital company, this is something we never understood - online makes things more efficient for the buyer, the seller, and the auctioneer. Why tax it?

This latest wave of buyer fee increases seems to be driven by consolidation. For example, when RB bought IronPlanet in 2017, the companies harmonized buyer fees. You guessed it - they choose the largest fee in each price tranche. With the recent combination of the salvage car business with the heavy equipment auctioneers (RB & IAA, Copart & PurpleWave), we have seen fees rapidly accelerate. These integrations will be critical to monitor going forward because of the heavy reliance on buyers’ fees in the different salvage auto space - will it continue to bleed over to the equipment space. Given that the salvage auto auction industry is basically a duopoly, it will be interesting to see how further cross-sector consolidation drives up all auction buyer and seller fees for the commercial truck and equipment auction industry.

So what does this mean for the buyer and the seller? The buyer is now paying 10% on a regular basis for any item up to $25,000. For example, in 2024 the buyer's premium of a $25,000 skid steer was $1,213. This year, that has more than doubled to $2,500! This is a huge new tax on buyers. When buyers bid they are acutely aware of all these fees, they budget for them, and it detracts from the purchase price due to bidding suppression. Who is impacted the most? The seller - in the form of reduced proceeds or net returns.

Finally, remember that 8-8.5% auction revenue rate from the late 90’s? It's now close to 24% according to the latest public financial statements and reports. So instead of that money going to the seller, it’s going to the auctioneer.  

The internet, AI, and 100% online models are bringing cost savings to many industries - Uber to taxis, Redfin to real estate, eBay and Amazon to retail, Expedia to travel agents - we believe the equipment remarketing industry can become even more efficient all while creating greater value for buyers and sellers alike.

This is important to understand when choosing your remarketing partner. It’s time there was discussion on this topic.

About bidadoo

bidadoo is the largest and most trusted online auction company on eBay. With eBay's millions of active buyers around the globe, bidadoo provides professional remarketing for used construction equipment, rental and municipal fleets, trucks, and other capital assets to many of the world's largest equipment and fleet companies. Check out our weekly online auctions and Buy It Now marketplace at bidadoo.com/auctions.